SHARES look set to make modest gains tomorrow on a mixed offshore lead, but analysts warn a pause in global equity markets' recent rallies is now on the cards.
Wall Street's major indices put in a mixed performance on Friday with the Dow Jones Industrial Average added 49.04 points, or 0.41 per cent, to 11,871.84 - its highest close since June 2008.
The benchmark Standard & Poor's 500 firmed 3.09 points, or 0.24 per cent, on Friday at 1,283.35 as investors digested General Electric's 15.6 per cent jump in annual 2010 profit to $US12.6 billion ($12.77 billion) and shrugged off Bank of America's disappointing December earnings.
But the tech-laden Nasdaq composite fell 14.75 points, or 0.55 per cent, to 2689.54 points as investors sold Apple, Google and Microsoft shares despite strong earnings reports from the first two earlier in the week.
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Weak December quarter earnings reports from US banking giants Goldman Sachs Inc and Citigroup Inc, left the Standard & Poor's 500 down at its first lower week-on-week close in seven weeks leading analysts to flag a likely equity market correction.
CommSec's chief economist Craig James said investors globally are getting more confident but equity markets are due for a pause.
"The Dow Jones has notched up eight straight weeks in a row (of gains). You just can't continue to rise week after
week."
"The Nasdaq has been on a tear since late last year."
JPMorgan's economist Jan Loeys said technical charts show global equity markets are overbought and noted the three previous corrections following equity market rallies of eight to 10 weeks' duration since March 2009.
Mr James said local futures are pointing to a gain of around 10 points in opening trade tomorrow, and the local market should bounce back after the benchmark S&P/ASX200 index closed down 28 points, or 0.59 per cent, to 4755.7 points on Friday.
"But I don't think investors want to get too carried away (with) producer prices on Monday and then consumer prices on Tuesday," he said.
The Australian Bureau of Statistics on Tuesday will report the consumer price index (CPI) for the December quarter, which can be "make or break" for interest rate settings, he added.
The CPI is expected to have risen by 0.7 per cent for an annual rates of 3.0 per cent, according to an AAP survey of 12 economists.
The Reserve Bank of Australia (RBA) is unlikely to increase the overnight cash rate until April because of the impact of floods in the eastern states and a weaker-than-expected jobs market, Mr James said.
JPMorgan thinks the RBA will lift interest rates again in May.
The corporate calender will be dominated by a raft of annual meetings held by smaller resources and energy companies, and Woolworths Ltd's second quarter sales figures releasedtomorrow.
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